I write about innovation, careers,and unforgettable personalities. My Forbes magazine cover stories have analyzed Sequoia Capital, LinkedIn, Amazon and Hewlett-Packard. In 1997, while at The Wall Street Journal, I shared in a Pulitzer Prize for national reporting. Along the way, I've written four books: "Merchants of Debt," "Health Against Wealth," "Perfect Enough" and "The Rare Find." Contact me anytime at GCAForbes@gmail.com

How LinkedIn Has Turned Your Resume Into A Cash Machine

LinkedIn’s chief executive, Jeff Weiner, doesn’t want to talk about FacebookFacebook. No, no, no. “I’m not going to get into comparisons with them,” he declares. And yet a few minutes later Weiner rises from his chair, walks over to a whiteboard and energetically sketches a diagram that the world’s other giant social network can’t match.

Weiner draws three concentric circles to show how LinkedIn makes its money. The outer one is subscriptions. NextNext, marketing and advertising. And in the center is LinkedIn’s richest and fastest-growing opportunity: turning the company’s 161 million member profiles into the 21st-century version of a “little black book” that no corporate recruiter can live without.

“That’s the bull’s-eye,” he says.

Recent attention in the social space has focused almost entirely on Facebook, with its 900 million users, 28-year-old celebrity CEO and bumpy initial public offering. In the first month after its May 18 IPO Facebook stock skidded an embarrassing 17%. Hardly anyone noticed, meanwhile, that LinkedIn shares have leaped 64% this year. Mark May from BarclaysBarclays Capital says LinkedIn is on track to gross $895 million and net $70 million, up 71% and 100%, respectively, from 2011.

Compare this performance to three and a half years ago, when Weiner joined LinkedIn. The company was running a $4.5 million annual loss, paying bills mostly by hawking online ads and peddling “premium subscriptions” for as little as $9.95 a month to journalists, hedge fund managers and the like. Linked In was too bashful for its own good.

That’s when Weiner’s bull’s-eye emerged. Rather than try to wring 20 bucks here and there from individual users, he refocused the company on selling a vastly more powerful service to corporate talent scouts, priced per user at as much as $8,200 a year. Today thousands of companies use LinkedIn’s flagship Recruiter product to hunt for skilled achievers. In human resources departments, having your own Recruiter account is like being a bond trader with a Bloomberg terminal—it’s the expensive, must-have tool that denotes you’re a player.

There’s no better way to understand LinkedIn’s quiet savvy, in the midst of Facebook’s noisy clatter, than to compare the two sites’ financial efficiency. With ComScore Web-usage data and public financial filings, it’s now possible to figure out how much revenue the two rivals collect for every hour that each user spends on the site. LinkedIn’s tally: $1.30. Facebook’s: a measly 6.2 cents.

One could argue that it’s better to have a small slice of something massive than a big slice of something smaller. But the numbers above are further skewed by a simple fact: Facebook, which derives 85% of its revenue from advertising, makes money only when you’re on Facebook. Once you sign up for LinkedIn, the social network monetizes your information, not your time. Mark Zuckerberg can crow about how his users spend, on average, 6.35 hours per month on Facebook versus 18 minutes for LinkedIn. But Facebook users may click on only one of every 2,000 ads. Ask yourself which model seems more sustainable.

These dynamics will get further magnified as the Web goes mobile. It’s hard to deliver ads to tablets and smartphones, which causes no small anxiety at companies like Facebook and GoogleGoogle. At LinkedIn, where 22% of visits now come from mobile devices— versus 8% a year earlier—this surge just means more of the kind of interactions and data that it can monetize.

To see how that plays out, wander the halls of a conference with Lars Schmidt, head of talent acquisition for NPR. “Recruiters don’t stay in the office anymore,” the public-radio executive explained one morning. “You need to be much more externally focused.” His old-fashioned ritual of swapping business cards has been redefined. Schmidt became a fan of CardMunch, a two-year-old iPhone app that turns photos of business cards into digital contacts. In January 2011 LinkedIn bought CardMunch and rebuilt it to pull up existing LinkedIn profiles from each card and prompt people to connect.

Much as LinkedIn’s long-term model makes sense, its near-term success stems from a manic dedication to selling services to people who buy talent for a living. During Weiner’s tenure LinkedIn has developed an intense, sales-focused culture in which new-account wins are celebrated by name at biweekly all-hands meetings. The best frontline salespeople for hot products such as Recruiter can earn $400,000 a year. And unlike at other Silicon Valley companies, where engineers rank as alpha dogs, LinkedIn’s salespeople pull off the most daring stunts. Sales- effectiveness leader Nate Bride once dyed his hair blue to match the LinkedIn logo—and shaved small parts of his skull to spell out the company name.

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Apart from being a great help for recruiters looking for apt people, Linkedin is a great platform where job search peer boosting and lot of discussions emerges. The online profile is just what needed for a career boost.

LinkedIn is the single source of research before a meeting to have some understanding of the person on the other side of the table, or more often, the other end of the phone line. I was recently on a call and when an unexpected participant said their name, there was audible clicking as others on the call quickly looked that person up on LinkedIn.

We’ve even reached the point where not being on LinkedIn can be considered a professional handicap, indicating that someone is behind the technology curve or for some reason unwilling to put themselves out in the public view. Once upon a time that was a simple personal choice, but with the rise of collaborative work and remote workforces, an introvert or hermit becomes a potential drag on productivity.

It is because of the above two reasons that LinkedIn has become ubiquitous and valuable to recruiters. It had to start with its usefulness to everyday people before the recruiters could have the content they needed.

I second your two reasons – though neither of those is how they make a profit! I have a sketch resume posted, and when I talk to people I usually look for theirs – and usually find it.

And I can see that recruiters love it, no doubt feel compelled to use it, but I have NOT posted any links on my account, which I guess is what recruiters would most love. I guess it’s those recruiter-access fees that comprise LinkedIn revenue – but I’m mystified at the scale. There were plenty of job boards already.

I have yet to find any of the site’s secondary services – discussion boards, etc – to be worthwhile.

Good overview and rationale for using LinkedIn. A feature that is most underrated with LinkedIn are their Groups. While your personal network can be very valuable, the Groups feature allows you to “meet” and interact with people of similar interest to you – whether for advice or feedback to a situation or problem – or to simply follow to be able to network and meet. In many ways it’s the same type of serendipitous situation as taking part at a large industry conference. Dig in to some of these features for the next story on LinkedIn…the clear value winner in the social media tools/apps space.